Profit Tracker: Margins Dip Below $100 per Head

For the first time in 37 weeks (Dec. 10, 2016) average industry cattle feeding profits on a cash basis dipped below $100 per head. Feedyards sold cattle last week at $107 per cwt., $3 lower than the previous week, and $10 per cwt. lower than a month ago. The result was a $57 decline in margins to last week۪s average of $83 per head, according to the Sterling Beef Profit Tracker. Packer margins climbed $19 per head to $139.The beef cutout price declined $5 per cwt., settling at $191.90, now $12 lower than a month ago. Break even prices for steers sold last week averaged $101 per cwt., $2 higher than the previous week. However, cattle placed on feed last week have a projected breakeven of $107.45 per cwt. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.
The cost of finishing a steer last week was calculated at $1,407 per head, which is $235 less than the $1,642 a year ago. A month ago cattle feeders were earning $273 per head, while a year ago losses were calculated at $4 per head. Feeder cattle represent 73% of the cost of finishing a steer, compared to 75% last year.
Farrow-to-finish pork producers earned $28 profit per hog last week, a $14 per head decrease from the previous week. A month ago farrow-to-finish pork producers showed a profit of $57 per head.
Pork packers saw their margins increase $5 per cwt. to $25 per head. Negotiated prices for lean hogs were $71.80 per cwt., a $7 decline. Cash prices for fed cattle are $11 lower than last year, and prices for lean hogs are about $7 per cwt. higher.
Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2017 will average $126 per cow. That would be $51 per head less than the estimated average profit of $177 for 2016. Estimated average cow-calf margins were $438 per cow in 2015.
For feedyards, Nalivka projects an average profit of $230 per head in 2017, which compares favorably with average losses of $4.25 per head in 2016. Nalivka expects packer margins to average about $100 per head in 2017, down from $114 in 2016.
For farrow-to-finish pork producers, Nalivka projects 2017 profit margins to average $29 per head, compared to $5 per head last year. Pork packers are projected to earn $19 per head in 2017, down slightly from $24 profit per head in 2016.